Hey I have to thread jack a little, something is really makeing me think. My wife and I bought our house last year for $225,000. Now you can puchase the same exact home for $145,000. Talk about a big hit, as to most of us. So I was thinking of giving the keys back to the bank on this house and going out and buying the same home ($145,000) cash. I would just take the 7 year hit and move on. So I know this is an insane idea but it is an idea. What do you guys think??
OverKill
This is what I have posted about previously. Not only will you get foreclosure home on the market taken back from people who can't afford their payments, you will get foreclosure homes back from people who choose not to take the (temporary) loss. This will be a smaller wave, but will still be thousands of additional homes given back to the banks.
I'd suggest you buy the new one first, then try to get the bank to take the home "deed in lieu." This means getting them to take the title back without going through the foreclosure process. It would, I believe ding your credit, but not so much as a foreclosure would.
Talk with your tax guy, an attorney and the bank's reo department and be sure you get the right answers.